Correlation Between ANSYS and S A P

Can any of the company-specific risk be diversified away by investing in both ANSYS and S A P at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ANSYS and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANSYS Inc and SAP SE ADR, you can compare the effects of market volatilities on ANSYS and S A P and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ANSYS with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANSYS and S A P.

Diversification Opportunities for ANSYS and S A P

0.43

Correlation Coefficient

ANSYS  S A P

Very weak diversification

The 3 months correlation between ANSYS and SAP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding ANSYS Inc and SAP SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE ADR and ANSYS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ANSYS Inc are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE ADR has no effect on the direction of ANSYS i.e., ANSYS and S A P go up and down completely randomly.

Pair Corralation between ANSYS and S A P

Given the investment horizon of 90 days ANSYS is expected to generate 2.26 times less return on investment than S A P. In addition to that, ANSYS is 1.2 times more volatile than SAP SE ADR. It trades about 0.04 of its total potential returns per unit of risk. SAP SE ADR is currently generating about 0.11 per unit of volatility. If you would invest  11,335  in SAP SE ADR on October 3, 2024 and sell it today you would earn a total of  13,286  from holding SAP SE ADR or generate 117.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ANSYS Inc  vs.  SAP SE ADR

ANSYS Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ANSYS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SAP SE ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ANSYS and S A P

The main advantage of trading using opposite ANSYS and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANSYS position performs unexpectedly, S A P can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in S A P will offset losses from the drop in S A P's long position.

The idea behind ANSYS Inc and SAP SE ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.